State utilities to miss energy deadline

Published 4:00 am, Saturday, August 2, 2008

California's electrical utilities probably will miss the state's 2010 deadline for increasing their use of renewable power and could face a serious obstacle if Congress does not extend tax credits for wind farms and solar plants, according to a report issued Friday.

By the end of 2010, the state's large, investor-owned utilities are supposed to ensure that 20 percent of the power they sell comes from such renewable sources as the sun and wind. Utilities such as Pacific Gas and Electric Co. have been frantically signing contracts with wind farm and solar power plant developers to meet that deadline.

But the report, the California Public Utilities Commission's latest quarterly update on the state's renewable power efforts, designed to fight global warming, found that the utilities probably won't reach 20 percent until 2012 or 2013. Most of the new wind farms and solar power plants they need have not yet been built.

"We're seeing a lot of interest from developers," said Andy Schwartz, one of the commission's energy advisers who worked on the report. "The problem is in transforming the projects that the utilities sign contracts with into steel in the ground."

Tax credit expiring

Furthermore, some of those projects won't be built if Congress doesn't extend a tax credit for renewable power developers. The credit expires at the end of the year, and although many members of both parties support it, its renewal has become mired in the fierce debate over the nation's energy policy. Many California companies, including San Francisco's PG&E, have thrown their lobbying clout behind efforts to win a renewal.

"It's absolutely vital," said PG&E spokesman Keely Wachs. "All of this is dependent on these projects coming online and getting the power delivered."

So far, the state's three investor-owned utilities have signed contracts for 5,900 megawatts of new, renewable power, enough for 4.4 million homes. But only 400 of those megawatts have been added to the grid to date.

That's not even enough to keep pace with California's rising demand for electricity, the result of the state's growing population. As a result, the percentage of power the utilities sell from renewable resources has actually declined in the past five years, falling from 14 percent in 2003 to 12.7 percent in 2007, according to the report. Dry winters, which cut the amount of power generated by hydroelectric dams, also contributed to that decline.

Report's stark assessment

Finally, the report gives a stark assessment of proposals to increase the state's use of renewable power even further.

Gov. Arnold Schwarzenegger and other policymakers have proposed that the state derive one-third of its electricity from renewable sources by the year 2020. Doing so is feasible but would be difficult, according to the report. It could require $60 billion in investments and would be likely to drive up the price Californians pay for power.

"Serving 33 percent of California's electricity needs with renewable sources will require an infrastructure build-out on a scale and a timeline perhaps unparalleled in the world," the report reads.

Several environmentalists said Friday that they were neither surprised nor alarmed by the report.

"We have to understand we're trying to do something that's never been done before," said Carl Zichella, regional director for the Sierra Club in California. "We shouldn't be beating ourselves up too much if we fall a little short on our deadlines. ... It's like this: We're building the car while we drive it, and we're trying to drive it very fast."

But Zichella and others emphasized the need for Congress to extend the tax credits. California's efforts to fight climate change, they said, risk being hamstrung by a decision outside the state's control.

Congress criticized

"The criminally irresponsible failure of the Congress to execute these extensions that have broad bipartisan support is jeopardizing the industry's capacity to deliver and hit its cost targets," said Ralph Cavanagh, director of the Natural Resources Defense Council's energy program.

Sen. Dianne Feinstein, D-Calif., will continue pushing for an extension, spokesman Scott Gerber said. "Sen. Feinstein believes this passage will go through," he said Friday. "I wouldn't say she's confident. She hopes her colleagues will change their minds and support it."

The report argues that increasing the state's use of renewable power over time will require far greater coordination and planning among the state agencies that deal with energy and climate-change issues. It also will require significant investment in improving and expanding the state's electrical grid to make sure the electricity from new wind farms, solar installations and geothermal power plants can reach the market.

Schwartz, of the PUC, said that despite the report's warnings on tax credits, deadlines and prices, the effort to expand the use of renewable power in the state appears to be working.

"The program is demonstrating that California has created a really vibrant market for renewable energy," he said. "There's a tendency to view the 2010 deadline as a litmus test for how well the program's working. ... It's important to set goals. But in our view, it's far more important that we keep our eye on the ball, which is reducing our dependence on fossil fuels."

POWER STRUGGLE

California utilities are racing to meet a state deadline of 2010 for deriving 20 percent of their power from renewable sources, such as the sun and wind. Here's the percentage of power they received from renewable sources in 2007:

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